Companies have an architecture, but usually not the right architecture. Inside every company is a core set of systems and processes that executes the thousands of daily transactions that keep a firm in business – taking orders, purchasing supplies, delivering products, and paying employees, for example. The way these systems and processes are structured – the company’s enterprise architecture – can help or hinder its efforts to execute its strategy. In our study of over 150 companies for this book, we found that many companies didn’t have the architecture they wanted. Whether through M&A, changes in environment, competitive moves, or just poor planning, their architecture needed to change.

To get the right architecture, companies should focus on enterprise architecture, not IT architecture. Almost all of the companies we surveyed had an “architect”, usually in IT, whose job was to design and improve the architecture of the company. Yet their efforts usually focused on IT architecture, and had little impact. The architects produced complex diagrams with mind-numbing detail, disconnected from business reality, and of little use. Ultimately little came from these efforts. The key to success is to focus on the higher level enterprise architecture – the organizing logic for core business processes and IT infrastructure.

Top performing companies design their enterprise architecture, use it to guide the evolution of their systems and processes, and leverage this capability for profitable growth. Top performing companies define how they will do business (an operating model), and design the architecture of the processes and systems critical to their current and future operations. They use this architecture to guide the evolution of their core foundation of systems and processes. Then these smart companies exploit their foundation, embedding new initiatives to make it stronger, and using the foundation as a competitive weapon to seize new business opportunities. And what makes this capability a competitive advantage is only a small percent of companies do it well – we estimate 5% of firms or less.

Using the architecture to build a stable foundation gives a company greater agility, faster time to market, lower risk, and lower costs. In a business world that is changing faster than ever before, the top performing firms in our study have a stable core – they digitize their core processes and embed them in a stable foundation. This foundation makes these companies both more efficient and more agile than their competitors. With global supply chains, pressure for ever faster time to market, more complex regulation, and huge shifts in customer demographics and desires, companies cannot predict the future. But they can decide what makes them great. And then they can create a low cost, high quality core of stability and constancy in a turbulent world. With a strong digitized core great companies slide smoothly into the next opportunity while their competitors stumble.

The objective of this book is to explain what top performing companies do and provide frameworks and tools to allow others to design and implement a world-class architecture. To inspire and illustrate what works well, we provide many examples of outstanding companies including: 7-Eleven Japan, CEMEX, Dow Chemical, ING DIRECT, MetLife, Schneider National, Toyota, UNICEF, UPS, and others. This book is about what makes these companies successful, and how to design and implement a stable foundation of systems and processes that will allow your company to achieve greatness.

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Enterprise Architecture Defined

At the core of any company is its base foundation of business processes and IT infrastructure. To build an effective foundation, companies must master three key disciplines.

The figure above illustrates how companies apply these three disciplines to create and exploit their foundation for execution. Based on the vision of how the company will operate (the operating model), business and IT leaders define key architectural requirements of the foundation for execution (the enterprise architecture). Then, as business leaders identify business initiatives, the IT engagement model specifies how each project benefits from, and contributes to, the foundation for execution.

• The operating model is the necessary level of business process integration and standardization for delivering goods and services to customers. Different companies have different levels of process integration across their business units (i.e., the extent to which business units share data). Integration enables end-to-end processing and a single face to the customer, but it forces a common understanding of data across diverse business units and can be difficult to achieve. The other dimension of the operating model is business process standardization – the extent to which business units will perform the same processes the same way. Process standardization creates efficiencies across business units but limits opportunities to customize services. Deciding on an operating model means making a commitment to how the company will operate.
• Enterprise architecture is the organizing logic for business processes and IT infrastructure of a company. The enterprise architecture provides a long-term view of a company’s processes, systems, and technologies, so that individual projects can build capabilities—not just fulfill immediate needs. The enterprise architecture is the explicit design of the systems and processes in a company that help it fulfill its operating model.
• The IT engagement model is the system of governance mechanisms ensuring that business and IT projects achieve both local and company-wide objectives. The IT engagement model has three parts: high-level governance, line-level project management, and the linkages between them. Engagement mechanisms influence project decisions so that individual solutions are guided by the enterprise architecture. Engagement helps achieve alignment between the IT and business objectives of projects and coordinates the decisions made at multiple organizational levels.

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